Penn Station is sweeping out its fast-food joints. KFC, Pizza Hut and eight other eateries operated by the Riese Organization on the lower, Long Island Rail Road level of the commuter hub will be toast in a couple of months. Landlord Vornado has decided it's time for a change along the busy West 33rd Street passageway, which connects Seventh and Eighth avenues. Riese has held the leases for 42 years.

"I'm certainly sorry to see my employees lose their jobs," said Chief Executive Dennis Riese. "But change is a fact of life." Some 130 workers will be laid off.

Sources say Vornado, the Manhattan-based real estate conglomerate with extensive holdings in the area, plans to spruce up that section of Penn Station, which it controls through its 1 Penn Plaza tower. The station's other landlords—the Metropolitan Transportation Authority, Amtrak and New Jersey Transit—are working on improvements for the beleaguered property as well. The plans will be detailed in a report, the "Penn Station Visioning Study," soon to be released by the railroads.

"Everyone's first instinct is to get out of Penn Station," said Jeff Gerlach, head of Amtrak's Northeast Corridor Capital Planning. "It's claustrophobic; there's no natural light."

Of course, these changes are simply stopgap measures as the stakeholders await the much grander Moynihan Station project, which will extend Penn Station to the Farley Post Office building and serve as Amtrak's main passenger waiting area.

Riese's fast-food exit will be the first, but others may follow as their leases expire. Vornado did not comment for this story, but another major tenant, Steven Kaplan, could be asked to change his offerings or give up some of his leases, which still have years on them, according to sources. He operates about 10 mostly grab-and-go food outlets, and a shoe-repair shop, along the north side of the same passageway—including Moe's Southwest Grill, Rose's Pizza and Pasta, and Planet Smoothie. He did not return calls for comment.

Mr. Kaplan was investigated by the FBI 14 years ago for controlling so much real estate in the station and for his alleged ties to organized crime, according to various news reports. At the time, he said that his "acquaintance" with the Gotti family had no bearing on his holdings at the station.

Vornado is also targeting real estate it owns surrounding the station. Chairman Steven Roth told investors a year ago at a Citigroup conference that his company is "in the process of turning over and buying out a lot of the retail tenants on the street so that we can populate them with better, more contemporary, more exciting tenants and restaurants," The Wall Street Journal reported.

For its part, the Riese Organization had been operating on the lower level without a long-term lease for many years. It also owns a T.G.I. Friday's there, which will be closing.

"In the past, Vornado has always extended my lease for three years at a time, though it was cancelable with 30 days' notice," Mr. Riese said. "Our term ended [recently], and they didn't extend it or articulate what they are doing."

Mr. Riese also speculated that Vornado wants to emulate Grand Central Terminal: "They see what happened at Grand Central, where there are trendy local food shops."

But food may not be on the table for his space. Sources say Vornado is leasing the 30,000 square feet that Riese occupies to Duane Reade, which will relocate its current lower-level store. A Duane Reade spokesman declined to comment.

Money-losers

Mr. Riese said his restaurants on the lower level have not been profitable for some time, which he attributes to rent increases and the fact that most people are rushing to LIRR trains or the exits.

He also runs fast-food outlets and a T.G.I. Friday's on the upper level, where Amtrak is his landlord. Those stores, which have several more years left on their leases, are profitable, he said. Amtrak customers, he added, are less hurried and spend more time shopping.

Amtrak will also likely upgrade its retail tenants "over time," said Mr. Gerlach. "The retail profile is being examined. We did hear that people were dissatisfied."

As Vornado sorts its retail plans, the three railroads have collaborated on the "Visioning" study, which will be used as a map for improvements to the station, with the first of its initiatives happening this year.

New signs throughout the station will be installed to help travelers better navigate the warrenlike environment of the building. The initiative will also more clearly identify the six entrances to the station, highlighting all three railroads and using one name for the facility, which is referred to as Penn Station and Pennsylvania Station at different locations.

Amtrak will also replace its outdated schedule board in the main waiting area with a flat LED display board, similar to those used in airports, and add schedule monitors throughout the building.

"We want people to be more comfortable sitting in the waiting areas and not clustering around the big board," Mr. Gerlach said.

Other initiatives call for relocating a homeless-outreach center on the upper level to elsewhere in the station in order to reopen a part of the West 32nd Street entrance that had been closed, giving New Jersey commuters better access to the subways.

"We have these railroads that have a separate backroom function," said Mr. Gerlach. "We are looking at whether we can clear out areas by consolidating some of our functions."

wrote on 05/26/14 at 1:09 PM

The worst tunnel in the world. Claustrophobic by design. Terrible confusing signs. No matter how often you're in there you just want to GET OUT! I hope they don't think that tube is conducive to anything other than grabbing a pretzel and getting the train. No one wants to dine in a tube.

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